Petition for a Writ of Certiorari — Broadview Chemical Corp. v. Loctite Corp.

Slt a | i ee i 4 i

SUPREME COURT. fT &. - 43

1°69

JOHN F. BAViS, CLERK

IN THE

Supreme Court of the Gnited States

October Term, 1968

no. LS 91

BROADVIEW CHEMICAL CORPORATION,

Petitioner,

VS.

LOCTITE CORPORATION,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Grancer Cook, Jk.

Davip A. ANDERSON

Hume, CLremMent, Hume & Leer

38 South Dearborn Street

Chicago, Illinois 60603

Attorneys jor Petitioner

Of Counsel:

JaMEs P. Hume

Henry L. Brinks

TWENTIETH CENTURY PRESS, INC., CHICAGO 60606

OD NVA ERFET ERE

CONTENTS

PAGE

ET ry ee a oan re 1 :

iene cal uuela euhuie dns eeéés ewectas 2 ;

Questions Presented for Review ..................-. 2

Constitutional Provision Involved .................. 2

I I I Sh ics va Olek so 000s cess b40ee ee 2

Reasons for Granting the Writ ..................... 8 :

A. Sound public policy against piecemeal litiga- :

tion and splitting causes of action compels a hold- ft

‘ing that a party should not be permitted to delib-

erately exclude compositions from an infringement

charge and settlement agreement, and thereafter to 4

assert that s milar compositions are in contempt of

i Cee eae h ook bs ahead RAK ERGO eORe KK 8

B. There is a conflict in the circuits as to whether

or not the prior art must be considered in deter- t

mining whether a patent is infringed in a contempt :

proceeding. This Court should grant certiorari to

resolve this conflict, and to guarantee a full hear- :

ing to persons charged with contempt, as is conso-

nant with the provisions of the Fifth Amendment

of the Constitution of the United States ........ 10

IBISEE RE SESE Pgh ery rere ay gr Pere a rang a SE 13

E

RRIF pet One ESR OR ITER te AN A-1—53 |

ii

TABLE OF CASES PAGE

Chemical Cleaning, Inc. v. Dow Chem. Co., 379 F.2d

294 (5th Cir. 1967, cert. denied, 389 U.S. 1040

DEE seen peed aaad ad Ge ch aeei waded ennneus 6, 7,8, 10

Ransburg Electro-Coating Corp. v. Ionic Electrostatic

Corp., 395 F.2d 92 (4th Cir. 1968), cert. denied, ——

NE nists cewestiek beceeeeghvectecasscansee 10, 11

(1945) ...... ier recia acon ceo cages Se

Westinghouse Elec. & Mfg. Co. v. Formica Insulation

Co., 266 U.S. 342, 350-51 (1924) ..... cece cece 11,12

CONSTITUTIONAL PROVISION

oy von edocs ea as sce Rimcen aces eck 2, 10, 11

Supreme Court of the Gnited States

October Tein, 1968

oO.

BROADVIEW CHEMICAL CORPORATION,

Petitioner,

vs.

LOCTITE CORPORATION,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Petitioner, Broadview Chemical Corporation, prays that

a Writ of Certiorari issue to review the judgment of the

United States Court of Appeals for the Second Circuit,

eniered in the abov«:-entitled cause on Jannary 23, 1969.

OPINIONS BELOW

The opinion of the United States District Court for the

District of Connecticut is reported at 159 U.S.P.Q. 80, and

is printed in the Appendix, pp. A-28 to A-41. The opinion

of the court of appeals, reported below at -—— F.2d ——,

160 U.S.P.Q. 449, is printed in the Appendix, pp. A-42 to

A-53.

2

JURISDICTION

The judgment of the court of appeals was entered Janu-

ary 23, 1969. The jurisdiction of this Court is invoked

under 28 U.S.C. §1254(1).

QUESTIONS PRESENTED FOR REVIEW

(1) Did the Court of Appeals for the Second Circuit

act contrary to public policy and commit reversible error

in refusing to hold that Respondent is estopped from assert-

ing contempt of court for compositions similar in all signifi-

cant respects to those deliberately excluded from Respond-

ent’s infringement charge?

(2) Did the Court of Appeals for the Second Circuit deny

the Petitioner due process of law by refusing to compel

the district court to consider the prior art in a contempt

proceeding brought to enforce a consent decree?

CONSTITUTIONAL PROVISION INVOLVED

The constitutional provision involved is Amendment Five,

which reads as follows:

No person shall . . . be deprived of life, liberty, or

property, witheut due process of law....

STATEMENT OF THE CASE

The Petitioner, Broadview Chemical Corporation, is the

only significant competitor of the Respondent in the field

of anaerobic sealant compositions. These compositions

have the property of remaining liquid in the presence of

air, while losing their liquidity and setting up in the absence

of air. They are therefore useful when it is desired to seal

two components together, such as a nut and a bolt.

3

The Respondent, Loctite Corporation, is the owner of

several patents relating to anaerobic sealants. Respondent

has refused to license these patents, preferring to use them

to maintain an exclusive position in the industry. The pres-

ent litigation was initiated by the filing of a declaratory

judgment action under 28 U.S.C. “ 2201, seeking a declara-

tion of invalidity and non-infringement of three of Respond-

ent’s patents. Petitioner supplied the complete formulations

for his sealant compositions (A-8) to the Respondent, and,

based upon these formulations, the parties entered into a

Stipulation of Facts (A-1), which defined the “infringe-

ment charge.” This “infringement charge” may be sum-

marized as follows:

BROADVIEW

LOCTITE FORMULATIONS

PATENTS CHARGED TO INFRINGE

950 patent Ill, V-XXVIilI, XXX-XXXIT

’*820 quinone patent IV-VI, IX-XII, XVI, XXIV-

|, XXXVI, XXXIT

°262 saccharin patent lI, 111, V, Vi

As the above table shows, the infringement charge made

it perfectly clear that Loctite’s patents were considered to

be separate entities, and that only certain particular Broad-

view formulations were charged to infringe each patent.

The following table summarizes the information supplied

to the Respondent, which was used to define the infringe-

ment charge and the issues in this litigation.’ As the table

demonstrates, this was not a haphazard infringement

charge, but was founded on a definite correspondence to the

components of Broadview’s formulations.

1The complete Broadview formulations, as supplied to the

Respondent, are set out in Appendix, page A-8.

2 AAR <1 RR amen ATS

TRE ERROR EN CONOR DEERE

4

SUMMARY OF BROADVIEW FORMULATIONS

Formamide

HereuvJas

CHP

Saccharin (Cumene

Formula SR-210 SR-206 in Hydroper

No. (Monomer) (Monomer) Formamide oxide)

I oe 41.) NO NO NO

a 2 YES NO t{ YES NO

; i YES NO t YES * YES

* iv YES t YES NO NO

hf YES t YES t+ YES * YES

it* VI YES t YES t+ YES * YES

* Vil YES NO NO * YES

* VIII YES NO NO * YES

t® 1X YES t YES NO * YES

= YES t YES NO * YES

t* XI YES t YES NO * YES

t* XII YES t YES NO * YES

* XIII YES NO NO * YES

vaae YES NO NO * YES

ee YES NO NO * YES

t* XVI YES t YES NO * YES

* XVil YES NO NO * YES

* XVII YES NO NO * YES

* XIX YES NO NO * YES

* XxX YES NO NO * YES

*XXI YES NO NO * YES

* XII YES NO NO * YES

* XXIII YES NO NO * YES

t* XXIV YES t YES NO * YES

t* XXV YES t YES NO * YES

t* XXVI YES t YES NO * YES

* XXVIII YES NO NO * YES

t* XXVIil YES t YES NO * YES

XXTX YES NO NO NO

* XXX YES NO NO * YES

*XXXI YES NO NO * YES

t* XXXII YES +t YES NO * YES

t—Charged to infringe the 820 quinone patent

t—Charged te infringe the ’262 saccharin patent

*—Charged to infringe the 950 patent

5

Thus, only those formulations containing saccharin were

charged to infringe the ’262 saccharin patent; only those

formulations containing SR-206 were charged to infringe

the 820 quinone patent; and only those formulations con-

taining cumene hydroperoxide were charged to infringe

the 950 patent. That formulations I and XXIX were ex-

cluded from the “infringement charge” was confirmed by

the settlement agreement (A-5-7), entered into by the par-

ties in order to settle the litigation. At the same time, the

parties entered into a consent decree in which the Petitioner

consented to the validity and past infringement of the

Loctite patents in suit.

Subsequent to the consent decree, Broadview marketed

a new line of formulations, designated CP-1 through CP-9.

CP-8 and CP-9 were identical to formulations I and XXIX,

which were entirely excluded from the infringement charge.

CP-1 through CP-7 were compounded to avoid infringement

in light of the infringement charge. For example, the

cumene hydroperoxide was eliminated to avoid infringe-

ment of the 950 patent and the SR-206 was eliminated to

avoid infringement of the ’820 quinone patent.

Not satisfied by all of these changes, the Respondent

initiated a contempt proceeding based upon the aforemen-

tioned consent decree on September 21, 1967, charging

infringement of the ’820 quinone and ’262 saccharin pa‘ents

by Broadview’s new formulations CP-1 through CP-9. The

court of appeals affirmed the decision of the trial court as

to formulations CP-1 through CP-7, but reversed the trial

court as to formulations CP-8 and CP-9, because they cor-

respond exactly to Broadview’s formulations I and XXIX,

which were excluded entirely from the infringement charge.

1 An amine was also employed in the compositions, which Peti-

tioner believed would avoid infringement of the ’262 saccharin

patent, the claims of which stated that the composition is “free of

amines.” However, this modification involved issues of file

wrapper estoppel not presented in this Petition.

opera F

Oa a ita

6

However, the court of appeals did not adopt Petitioner’s

argument that Loctite is now estopped from charging in-

fringement by compositions similar in all significant re-

spects to those excluded from the original infringement

charge for the ’820 quinone patent.

At the contempt proceeding before the district court,

Petitioner attempted to show that his compositions were

in the prior art, and therefore part of the public domain

which is free of any patent monopoly. Specifically, petitioner

directed interrogatories 86-87 (A-9-11) and 93-94 (A-12) to

the Respondent, seeking to determine whether or not com-

positions similar to the Petitioner’s accused compositions

were in the public domain. Petitioner further sought to

determine whether or not Respondent contended that such

compositions were an infringement and a violation of the

consent decree. All of these interrogatories were objected

to by the Respondent.

In support of his objectiens, counsel for Respondent cited

Chemical Cleaning, Inc. v. Dow Chem. Co., 379 F.2d 294

(5th Cir. 1967), arguing that, under this authority, prior

art could not be introduced to interpret the scope of the

claims involved in a contempt proceeding. Relying on Dow,

the court sustained Respondent’s objections to Petitioner’s

interrogatories 86 and 87. In the belief that this was the

position of the court, Petitioner’s attorney did not press for

answers to these interrogatories at that time, but permitted

the trial court to go on to consideration of interrogatories

93 and 94. Again the Dow case w’s raised by Respondent’s

counsel, and the following colloquy took place:

MR. AMES [counsel for Loctite]: First of all, I

might just quote to you the case that we just pulled out,

the Dow Chemical Case.

It says, “Furthermore, proof that CCI’”—that was

the infringer—“‘was practicing an expired patent

ace ett ets COLE ETON

7

should have been adduced at the original infringement

proceedings”.

This is a contempt, a motion to punish for contempt,

and CCI the infringer said, “Oh, but we are practicing i

something in the prior art” and it was not. The Court :

of Appeals for the Fifth Circuit a half-year ago said,

no—.

THE COURT: Too late now.

MR. AMES: Too late.

THE COURT: All right. That’s another point.

MR. SWEENEY: There was nv hearing on any of

these points.

THE COURT: That is just a case of being estopped,

you can’t raise it now. If we are going to raise some-

thing now that can’t be decided and ought not to raise

it ai all, why get into it? [Emphasis added.]

The trial court thus made it clear that, based on the deci-

sion in Dow, inquiry into the prior art would not be per-

mitted. It is submitted that the trial court committed a

reversible error of law in so ruling.

FSO EC ee ae RON en ey

This error of law was urged upon the court of appeals,

but was given short shrift in the court’s opinion. Dealing

with the trial court’s refusal to permit inquiry into the

prior art in a brief paragraph, the court of appeals reached

the following conclusion (A-48-49) : ;

Having examined the pertinent portions of the rec-

ord, we find that Judge Blumenfeld actually placed

no restrictions like those now suggested upon Broad- :

view’s inquiries. Two of the four interrogatories in

question were answered to the expressed satisfaction

of Broadview’s attorney. The same attorney suggested

that rulings on the other two be deferred. His failure

thereafter to revive the matter, reflecting its essential

triviality, can scarcely ground a claim of error by the

district judge.

8

This refusal by the court of appeals to review this error

simply cannot be justified in light of the record taken as

a whole, and of the strong public policy, as discussed here-

inafter, in favor of securing to the public the right to that

which is in the public domain. Taken in the context of the

proceedings,’ and particularly in the context of the court’s

strong reliance on Dow, the expression of satisfaction by

Petitioner’s counsel can only be taken to mean that he was

satisfied ‘hat he would not get any answers to his interroga-

tories in the light of the trial court’s reliance on Dow. Fur-

thermore, the failure to resume attempts to obtain answers

to interrogatories that had been deferred also appeared

equally fruitless to Petitioner’s counsel, again in view of

the trial court’s statement that it was “Too late now” for

inquiry into and consideration of the prior art. To attach

any higher importance to the statements of Petitioner’s

attorney would be to elevate form over substance in over-

looking the serious error of the district court whieh the

court of appeals failed to appreciate.

REASONS FOR GRANTING THE WRIT

A. Sound public policy against piecemeal litigation and

splitting causes of action compels a holding that a party

should not be permitted to deliberately exclude composi-

tions from an infringement charge and settlement agree-

ment, and thereafter to assert that similar compositions

are in contempt of court.

With respect to Respondent’s ’820 quinone patent, only

those Broadview formulations that contained a certain com-

ponent—the SR-206 monomer—were charged to infringe.

1It is best to read the full transcript with respect to the inter-

rogatories involved in order to appreciate the force with which

the trial court rejected Petitioner’s interrogatories, anc the

court’s complete reliance on Dow. For the convenience of this

Court, the transcript relating to these interrogatories is set out

in full in the Appendix, pages A-13 to A-27.

9

Those that contained only the SR-210 monomer were not

so charged. In reliance on this charge, Petitioner aban-

doned the use of SR-206, and employed SR-210 exclusively.

Thereafter, Respondent successfully asserted that, despite

this change, Petitioner’s new formulations were infringe-

ments of the ’820 quinone patent, and therefore in con-

tempt of court.

Although disclaiming any estoppel theory, the court of

appeals in effect found that an estoppel applied to Respond-

ent, but that it was limited to Broadview’s formulations

CP-8 and CP-9, which were not initially charged to infringe

any of Respondent’s patents. In going only half way, and

failing to consider Respondent’s patents individually, the

court of appeals left a serious injustice uncorrected.

The doctrine of estoppel was created to prevent such

injustices. It is founded on the public policy that prevents

a litigant from taking one position in order to serve his

own interests, and later taking a contradictory position to

the detriment of his opponent. Petitioner acted in good

faith, and in the public interest, by entering into a consent

decree, abandoning those formulations which were the sub-

ject of the decree, and adopting new formulations which

Respondent in effect invited the Petitioner to adopt in its

infringement charge. In the contempt proceeding now be-

fore this Court, Petitioner is being punished for its conduct

in following the trial marked out by the Respondent. Re-

spondent should be estopped from asserting contempt inso-

far as the 820 quinone patent is concerned, and certiorari

is sought to provide this result.

If the result in this litigation is allowed to stand, parties

to patent litigation will be at the mercy of the whims of

a patentee who decides to charge only certain products with

infringement, while excluding others—even though he is

aware of the exact formulation of each product. There-

after, he may return to the court and assert that the prod-

SEER Te I NT SN EE ee

10

ucts which were excluded from the original infringement

charge now place his opponent in contempt. Contempt pro-

ceedings are extraordinary proceedings, and can involve

harsh penalties in addition to ordinary damages. Such

a procedure is an unwarranted denial of the most elemental

aspects of justice aud fair play, and it is respectfully sub-

mitted that this Court should grant certiorari in order to

prevent such an injustice.

B. There is a conflict in the circuits as to whether or not

the prior art must be considered in determing whether a

patent is infringed in a contempt proceeding. This Court

should grant certiorari to resolve this conflict, and to

guarantee a full hearing to persons charged with contempt,

as is consonant with the provisions of the Fifth Amendment

of the the Constitution of the United States.

The conflict in the circuits is clear. In Chemical Cleaning,

Inc. v. Dow Chem. Co., 379 F.2d 294, 297 (5th Cir. 1967),

cert. denied, 389 U.S. 1040 (1968), an attempt was made to

have prior art considered in a contempt proceeding. In

response to this attempt, the court stated:

Furthermore, proof that CCI was practicing an expired

patent should have been adduced at the original in-

fringement proceeding. CCI’s contentions on this point

must be rejected and we conclude that the District

Court’s finding . . . must be affirmed.

In Ransburg Electro-Coating Corp. v. Ionic Electrostatic

Corp., 395 F.2d 92, 96 (4th Cir. 1968), cert. dented, ——U.S.

——, the court held directly to the contrary, asserting that

prior art may be introduced in a contempt proceeding:

Regardless of the answers to all of these questions

arising out of an interpretation of the language of the

injunction, consideration must be given to the prior art

for it was never intended, of course, that the injunction

should prohibit its practice.

11

It is Petitioner’s position that the Ransburg case repre-

sents the sound view, and indeed the only view that is

consonant with the due process clause of the Fifth Amend-

ment. Furthermore, Ransburg is the only view that is in

accord with the overwhelming weight of public policy that

the public is entitled to practice that which is in the public

domain, free and clear of any patent monopoly.

In Westinghouse Elec. & Mfg. Co. v. Formica Insulation

Co., 266 U.S. 342, 350-51 (1924), this Court considered a sit-

uation where a party was estopped to deny the validity of a

patent because he was an assignor. The assignor claimed,

however, that the estoppel did not prevent him from prac-

ticing the teachings of the prior art, which is part of the

public domain. Agreeing with this contention, this Court

stated:

As between the owner of a patent and the public, the

scope of the right of exclusion granted is to be deter-

mined in the light of the state of the art at the time

of the invention. Can the state of the art be shown in

a suit by the assignee of a patent against the assignor

for infringement to narrow or qualify the construction

of the claims and relieve the assignor from the charge?

... We think, however, that the better rule, in view

of the peculiar character of patent property, is that the

state of the art may be considered. Otherwise the most

‘ satisfactory means of measuring the extent of the

grant the Government iniended and which the assignor

assigned would be denied to the court in reaching a just

conclusion. [Emphasis added.]

The Formica decision was approved and extended by this

Court in Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249,

207 (1945). After approving the Formica decision, this

Court stated:

It follows that the patent laws preclude the petitioner

assignee from invoking the doctrine of estoppel, as a

means of continuing as against respondent, his

assignor, the benefit of an expired monopoly, and they

12

preclude the assignor from estopping himself from

enjoying rights which it is the policy of the patent laws

to free from all restrictions.

It is Petitioner’s view that the decision of the trial court

in the present litigation, which was not overturned by the

court of appeals, is totally irreconcilable with the clear

statements of this Court in Formica and in Scott, namely,

that the public has a right to practice that which is within

the prior art. It is unthinkable that the “form” of a patent

proceeding (contempt v. infringement action) can solely

determine whether the prior art can be considered. It was

never intended in patent infringement actions that the

patent claims would be interpreted in the context of the

prior art, while in contempt proceedings patent claims

would be interpreted in a vacuum. Such a double-standard

was never contemplated hy the patent system. Further, to

interpret the claims broadly in a vacuum (and unlawfully

extend the patent monopoly), for the purpose of finding

contempt, violates the principles of the patent system and

the public interest. It is submitted that this Court should

grant certiorari to secure to the public the free use of that

which is within the public domain.

13

CONCLUSION

It is urgent that this Court grant certiorari to establish

fundamental principals of justice and fair play in patent

contempt proceedings, as well as to resolve a conflict in the

circuits, thereby guaranteeing to those operating under

injunctions, that fundamental due process of law secured

by the United States Constitution. The present case pro-

vides a dramatic example of unwarranted unfairness and

denial of such due process.

Respectfully submitted,

GRANGER Cook, JR.

Davin A. ANDERSON

Hume, Clement, Hume & Lee

38 South Dearborn Street

Chicago, Illinois 60603

Attorneys for Petitioner,

Broadview Chemical

Corporation

Of Counsel:

James P. Hume

Henry L. Brinxs

March 11, 1969